This matter is before the court on the motion to dismiss filed by Bank of America, N.A., Mortgage Electronic Registration Systems, Inc., and Federal National Mortgage Association ("defendants"). (ECF 6.)*fn1 The motion was decided without a hearing. For the reasons below, the court GRANTS defendants' motion.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs filed their pro se complaint on September 27, 2012, alleging what appear to be ten*fn2 causes of action relating to a pending foreclosure on plaintiffs' home:
1) violation of California Civil Code § 2923.5; 2) fraud under 18 U.S.C. § 1343 and § 1956(b);
3) intentional misrepresentation; 4) violation of California Civil Code § 2923.6; 5) fraud under California Civil Code § 1572; 6) violation of California Business and Professional Code § 17200 (captioned as a violation of California Civil Code § 1572); 7) usury; 8) conversion; 9) conspiracy to commit conversion; and 10) fraudulent concealment. (ECF 1.) Defendants filed the pending motion to dismiss on December 14, 2012. While defendants purport to seek dismissal of all claims, they do not address the fraudulent concealment claim in their motion. (ECF 6.) On January 16, 2013, plaintiffs, through their newly obtained counsel, filed an opposition in which they request leave to amend their pro se complaint. (ECF 10.) Defendants filed a reply on February 6, 2013. (ECF 17.)
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a party may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." A court may dismiss "based on the lack of cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
Although a complaint need contain only "a short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), in order to survive a motion to dismiss this short and plain statement "must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint must include something more than "an unadorned, the-defendant-unlawfully-harmed-me accusation" or "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action . . . .'" Id. (quoting Twombly, 550 U.S. at 555). Determining whether a complaint will survive a motion to dismiss for failure to state a claim is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. Ultimately, the inquiry focuses on the interplay between the factual allegations of the complaint and the dispositive issues of law in the action. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984).
In making this context-specific evaluation, this court "must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party." Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). This rule does not apply to "'a legal conclusion couched as a factual allegation,'" Papasan v. Allain, 478 U.S. 265, 286 (1986) (quoted in Twombly, 550 U.S. at 555), nor to "allegations that contradict matters properly subject to judicial notice" or to material attached to or incorporated by reference into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). A court's consideration of documents attached to a complaint or incorporated by reference or matter of judicial notice will not convert a motion to dismiss into a motion for summary judgment. United States v. Ritchie, 342 F.3d 903, 907--08 (9th Cir. 2003).
Federal Rule of Civil Procedure 15(a)(2) states "[t]he court should freely give leave [to amend pleadings] when justice so requires" and the Ninth Circuit has "stressed Rule 15's policy of favoring amendments." Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989). "In exercising its discretion [to grant or deny leave to amend] 'a court must be guided by the underlying purpose of Rule 15 - to facilitate decision on the merits rather than on the pleadings or technicalities.'" DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987) (quoting United States v. Webb, 655 F.2d 977, 979 (9th Cir. 1981)). However, "the liberality in granting leave to amend is subject to several limitations. Leave need not be granted where the amendment of the complaint would cause the opposing party undue prejudice, is sought in bad faith, constitutes an exercise in futility, or creates undue delay." Ascon Props., 866 F.2d at 1160 (internal citations omitted). In addition, a court should look to whether the plaintiff has previously amended the complaint, as "the district court's discretion is especially broad 'where the court has already given a plaintiff one or more opportunities to amend [its] complaint.'" Id. at 1161 (quoting Leighton, 833 F.2d at 186 n.3).
Defendants argue that each of plaintiffs' claims fails for two reasons. First, as a
threshold matter, plaintiffs have not alleged complete tender of the debt. (Mot. to Dismiss at 4-5, ECF 6.) Second, plaintiffs have not adequately pled facts sufficient to support any of their claims. (Id. at 3--4.) Defendants also assert inadequate pleading arguments specific to each of plaintiffs' causes of action. (Id. at 5--14.)
Plaintiffs counter that tender of the outstanding debt is not required to succeed on any of their claims. (Opp'n at 5--7, ECF 10.) Plaintiffs voluntarily abandon their usury cause of action (claim seven) and do not respond to defendants' arguments against their conversion causes of action (claims eight and nine). (Id. at 5.) In reply, defendants argue the court should deny leave ...